Photo from Progress Energy
Plant Problems Hearings raised suspicions about the cost of fixing the Crystal River facility.

As the North Carolina Utilities Commission wrapped up hearings into Duke Energy's surprise ousting of CEO William D. "Bill" Johnson, a repair project at the troubled Crystal River nuclear powerplant remained at the heart of the boardroom shake-up. However, it was unclear whether state regulators would examine the matter further.

In testimony on July 19, Johnson alleged that Duke tried to scuttle the utility's merger with Progress Energy, of which he had been chairman and CEO. As part of the deal, Johnson, 58, was named CEO but was ousted earlier this month following the merger. He rebutted earlier testimony by Duke's new CEO, James Rogers, and utility director Ann Maynard Gray. Both claimed Johnson's "poor communication" of repairs and insurance issues at Progress Energy's Crystal River plant led to the board's action.

"I did not fail to inform anybody about anything," Johnson countered, noting he "absolutely" informed Duke about the repair issues at the 914-MW plant. It was at the behest of Duke officials that Progress Energy slowed down negotiations over repair claims with Nuclear Electric Insurance Ltd., he added. Rogers had testified that Duke was surprised that negotiations with the insurer were still ongoing at the time of the July 2 merger.

Crystal River has been idle since 2009 and, according to Johnson, needs an estimated $1.3 billion to repair cracks in one containment building. But Jim Warren, executive director of the North Carolina Waste Awareness and Reduction Network (NC WARN), says an unreleased internal study initiated by the Duke board will show that Crystal River repairs could cost more than Johnson stated.

In its own filings to the commission, the consumer watchdog group urged regulators to obtain the study. "Without a full study and repair plan, the estimate may be so hypothetical as to be unfounded," the group said. Johnson testified that engineering for the repairs was about 85% complete and could cost $1.3 billion—a figure he first used in 2011, when engineering began.

NC WARN says higher-than-expected costs for Crystal River could hurt Duke's bond rating and increase its borrowing costs for capital projects. The group says Zapata Engineering, Charlotte, N.C., is handling the ongoing study, but neither Duke nor Zapata would comment.

Despite the Crystal River issue, regulators have not decided if they will review the study, said Sam Watson, commission general counsel. The other option is decommissioning the plant, which could cost more than $1 billion and likely would take years to complete.

During Gray's testimony, commission Chairman Edward Finley Jr. said nixing the merger was an option, a prospect earlier deemed unthinkable by analysts.

Of that possibility, Warren said, "It's less of a long shot than it was a few days ago. We're working to derail it."